Crew Agreements?

November 8, 2017

Crew Agreements?

Yes, crew agreements. Federal law requires that the owner of a fishing vessel sailing from a U.S. port and of 20 gross tons or over must have a written employment agreement with each seaman. The agreement must state the effective dates of the agreement, and “the terms of any wage, share, or other compensation arrangement peculiar to the fishery in which the vessel will be engaged.” It may also include other provisions.

I’ll give you a tour of the crew contract I supply to clients. Be advised, when I am preparing a crew contract, I represent the vessel owner, and the contract is written to favor my client, although within the law.

It begins with the personal data of the crewmember: Full name, mailing address, date of birth, Social, phone.

Then the fact that the ship and the crewmember are entering into a crew contract, and a rough description of the duties he or she will perform: “Crew Member shall perform such duties as are customarily performed by one who holds such a position on other similar fishing vessels operating in the Northwest Atlantic Ocean, and shall render such other services and duties as may be assigned to him from time to time by the Master of the Vessel. Crew Member’s duties include mending and maintaining all associated gear in such as manner that it is ready for fishing. Crew Member understands that if he/she does not assist in off loading and preparation for the next trip, he/she is subject to forfeiture of earnings for the trip for which assistance was not provided.”

That’s followed by the statement that the crew is hired for one trip at a time, although the contract terms apply to all trips made. Because of this clause, if the sailor is injured the ship will pay him full wages or shares only through that single trip. (Thereafter, Maintenance is paid, until the sailor reaches maximum medical improvement.)

The contract makes clear that crew are independent contractors. That way the ship doesn’t pay employment taxes.

Then a detailed outline of the plan of compensation, typically stated as a percentage of gross earnings (lay share), and including a careful definition of gross earnings. We make clear that the point of hire is dockside: No pay or compensation for travel.

The crewmember then warrants that there is no medical or physical reason why he would be unable to perform all duties. If the sailor is hurt or gets sick, he is to promptly report that to the master. Maintenance (the sum paid to an injured or sick sailor while he convalesces) is limited to $35.00 per day, “the parties agreeing that said amount sufficiently replaces the value of food and quarters otherwise provided on board.”

Crew agrees to obey all laws and rules. No drugs or firearms allowed, and no visitors without permission. If you misrepresent your skills you can be canned immediately. Finally, a jurisdictional clause, the parties agreeing that no suit will be brought except in Maine. That’s important.

The agreement is signed by the sailor and by the owner. There is good law that the master can sign for the owner. My practice is to make sure the master always signs. Both parties get a copy of the contract.

If there is no written, signed crew agreement, crewmembers can sue the ship for “the highest rate of wages at the port from which the seaman was engaged or the amount agreed to be given the seaman at the time of engagement, whichever is higher.” In addition, the ship loses many of the contractual protections these contracts afford: limiting the time to sue for wages, limiting the voyage pay if there is an injury, controlling the forum and choice of law if there is a suit, and many other terms.
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I just learned something interesting and a little scary about IRS liens. The typical non-IRS judgment, recorded in the Registry of Deeds, attaches only to property the debtor owns when the judgment is recorded. That’s the usual rule for judgment liens: When a judgment lien is created by recording the judgment (actually, the “writ of execution”) in the Registry, or with the Bureau of Motor Vehicles, or with the Secretary of State, the judgment lien attaches only to property, vehicles or other assets the debtor owns at the moment the judgment is recorded. So if I lien a debtor’s property by recording a judgment in the Registry of Deeds where the property is located, but the following week the debtor buys another piece of land, my lien does not encumber the new land.

Not so for the IRS. Once the lien has come into existence, it attaches not only to the taxpayer’s property, but also to any new property acquired by the taxpayer during the existence of the lien. In other words, unlike a typical judgment lien the federal tax lien attaches to a taxpayer’s after-acquired property. Not only that, an IRS lien “comes into existence” when the taxes are due and are not timely paid: no court or administrative action is required. And the lien does not even have to be recorded in a Registry of Deeds or anywhere else to be effective. That’s a stacked deck!